TORONTO, Ont. -- Initial reaction to the change in leadership at major LTL carrier Vitran, which will see board member Bill Deluce take over the reins as interim president and CEO for the departed Rick Gaetz, has been cautious.
TORONTO, Ont. — Initial reaction to the change in leadership at major LTL carrier Vitran, which will see board member Bill Deluce take over the reins as interim president and CEO for the departed Rick Gaetz, has been cautious.
“Although we believe CEO Rick Gaetz had been implementing some of the correct steps needed to turn the money-losing US LTL division around and swing the company back into profitability, his exit may be reflective of frustration by the board of directors and investors alike that the turnaround was taking longer to produce results than most had hoped,” commented Jason Seidl, director of Cowen Securities. He added that the timing of the exit could also signal “potentially disappointing operating results in 1Q13, uncertainty surrounding ensuing quarters, and the board’s lack of confidence in the 11-point operational turnaround plan.”
Seidl said once the company gets past its current turbulence, its long-term outlook could improve due to solid LTL industry fundamentals, the company’s improved balance sheet, and the promise of a new direction. However, Gaetz’ departure could “push out the profitability goal even further and potentially lead to further angst among employees at the beleaguered US division,” he cautioned.
The US division, Vitran Express U.S., has struggled in trying to absorb the regional LTL operations of Tennessee-based Milan Express, which it acquired in January 2011. The acquisition expanded Vitran’s LTL coverage in a 10-state region stretching across the Midwest from Illinois into the deep South and the Carolinas.
Gaetz had brought in Chris Keylon, a former FedEx Freight executive as president to turn the division around.
Vitran has been in the headlines several times in the first quarter. Its year started off with the announcement that Transforce had purchased 10.75% of Vitran’s shares, a move that raised eyebrows in the industry as Transforce has been the most aggressive player in consolidating the Canadian trucking market. Then a couple months later Transforce announced it had reduced its holdings in VItran by about a third to about 7.7% of the company’s equity. TransForce did not explain the reasons behind its decision to reduce its share of Vitran, stating only that the securities are for investment purposes and that it reserves the right to increase or decrease its holdings depending on the conditions.
At the start of March Vitran also announced it had completed the sale of its Supply Chain Operation division to Legacy Supply Chain for $97 million in cash and that it would use some of the proceeds to reduce its outstanding debt and support the development of its LTL business.
Gaetz joined Vitran in 1989 after having served as Vice President of Clarke Transport Canada. In 2002 he was named CEO. Gaetz is a former winner of the Al Palladini Transportation Person of the Year Award, which recognizes individuals in the transportation sector who have assumed a leadership role during their career and advanced their companies in the field of transportation. He was given the award in 2005.
“On behalf of the Board of Directors, I want to thank Rick Gaetz for his many contributions to Vitran over the years and to wish him well in his future endeavours,” said Richard McGraw, Chairman of the Board at Vitran, in a statement.
His replacement, Bill Deluce has been a director with Vitran since 2004, and has served as CEO for various corporations. He will be working closely with Vitran’s current management team and Board of Directors to oversee the company’s ongoing operations and efforts to improve the financial results.
Deluce, a chemical engineer by training, has been the CEO and a director of various corporations, including CSAE, an aircraft leasing, financing and management company and Wicklow Consulting, an investment company with global interests in the aviation and mining sectors.
“The Board believes that this experience combined with Bill’s history as a successful entrepreneur, makes Bill well suited to serve as interim President and Chief Executive Officer of the Company,” Vitran said in a statement.
Deluce grew up in an aviation family and founded, managed and served in major positions at scheduled and charter air service companies in North America and Africa. He has become known for his involvement with shipping needed medical equipment to war-torn Rwanda.
Vitran will be reporting its first quarter financial results before the market opens on April 25.
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